US Consumer Sentiment Data on Tab
The first print of the US consumer sentiment data will likely pave a way for a rebound in the final consumer confidence reading following three consecutive months of deterioration. Further, industrial production which has dropped in the previous six out of seven months is anticipated to decline in March. A speech by Chicago Federal Reserve (Fed) President, Charles Evans, will also attract market attention.
The just released data indicated that construction activity in the UK slightly weakened in February, amid a sharp decline in the small private industrial sub-sector. Meanwhile, new home building in the UK jumped at its fastest pace in two years. Investors will look forward to the Euro zone’s trade data which is anticipated to show a slight widening in the region’s trade surplus for February. Earlier, data showed that the total trade surplus in the third largest economy of the Euro zone widened in February.
Pound Sterling – UK Markets
Yesterday, the BoE in its monetary policy meeting decided to hold its benchmark interest rate unchanged at a long-term record low level and also stayed put on its quantitative easing programme as fears over the rising possibility of Britain’s exit from the European Union (EU) continued to weigh on the UK economy. Minutes from the BoE’s latest monetary policy meeting indicated that all nine policymakers were in favour of keeping the interest rate unchanged, however, stated that the BoE is more likely raise interest rates than trim in the future. The committee of policymakers refrained from commenting on what measures the central bank might adopt in the case of Britain’s exit from the EU. However, the committee stated that the economic data will be dealt with more caution than in normal circumstances.
The Pound is trading weaker against the US Dollar this morning, after the just published data revealed that the UK construction sector slipped in February, however construction of new homes rose at its fastest pace in two years.
US Dollar – US Markets
The greenback traded higher against the Euro and the Pound yesterday, following the release of mixed US economic data. The consumer price index (CPI) rebounded less than expected in March, justifying the Fed Chairwoman, Janet Yellen’s recent warnings about the pace of growth and inflation in the country. An increase in the price of gasoline was partially offset by a decline in food and clothing prices. The core CPI, which strips out food and energy costs, registered its smallest increase since August 2015. On the other hand, a labour department report showed that the number of US workers who applied for first-time unemployment benefits declined for the second consecutive week to its lowest level since 1973, underscoring the strength in the nation’s labour market.
In the economic data space, a string of significant US economic releases are due later today. Focus will be on the nation’s industrial production and the University of Michigan consumer sentiment index, along with a speech by the Chicago Fed President, Charles Evans.
Euro – European Markets
The shared currency continued to trade in a tight range against the US Dollar and the Pound this morning. Rising possibilities of Brexit are anticipated to weigh on the shared currency. In economic news, the release of the Euro zone’s trade data later today is expected show that the region’s trade surplus slightly widened in February. Europe’s trade surplus has been continuously strengthening for a long period, with October 2011 the last month when the Euro zone posted a trade deficit. Earlier in the day, data showed that the total trade surplus in the third largest economy of the Euro region widened in February.
Going forward, major focus will be on the European Central Bank’s (ECB) interest rate decision scheduled towards the latter part of the next week. Ahead of the ECB’s monetary policy meeting, investors will look forward to a couple of ZEW surveys showing economic sentiment in the Euro zone and Germany. A publication of German Bundesbank’s monthly report will also attract significant market interest.
Other Currencies – Highlights
The Japanese Yen is trading on a firmer footing against the US Dollar this morning. Earlier, the local currency was little changed against its US currency counterpart following the release of disappointing industrial production data in Japan. Data showed that Japan’s industrial production fell in February, but less than previously estimated. Last month’s reading showed that the nation’s industrial activity had picked up pace at the start of the year.
In the session ahead, the direction in the US Dollar - Japanese Yen currency pair will be influenced by broader market sentiment ahead of today’s economic release in the US. Investor focus will be on the US industrial production data along with the first print of the consumer sentiment index by the University of Michigan. A speech by the Chicago Fed President, Charles Evans, will also be in the limelight ahead of this month’s monetary policy meeting scheduled towards the end of the month.